Unlock the Full Potential of Digital Transformation
Setting an Ambitious Business Aspiration
Many digital transformation efforts fail due to a lack of ambition. Companies often hold back to increase the odds of success or to minimize risks. However, this can lead to pilot projects that fail to show enough value or gain business buy-in. Successful digitally transformed companies invest a short upfront period to set a business-centered and ambitious vision. They identify customer pain points and reimagine critical end-to-end business capabilities to deliver breakthroughs in performance and customer experiences. For example, an industrial company aimed to create a world-class value chain with a 5 to 10 percent increase in customer retention and an 80 percent reduction in non-value-add work. This vision came from best-practice visits to other industries, inspiring them to reimagine a different way of running the business.
Having a clear aspiration ensures that teams have the license to reinvent and improve critical processes. Top management buy-in aligns the aspiration with the company's strategic goals and helps justify allocating resources. A customer-centric goal provides a vision for the entire organization to rally around. It encompasses not only financial and operational impacts but also the well-being of people.
Prioritizing Cross-Functional Initiatives
After setting an ambitious vision, companies must disaggregate and sequence the overall journey into discrete digital products or use cases. Prioritized use cases should have a direct or indirect impact on operating profit and cash flow generation. For instance, more-effective supply and demand matching can optimize inventory and minimize lost sales. Pricing optimization engines can set and adjust prices based on customer demand. Marketing effectiveness can improve the ROI of campaigns.
To achieve transformative outcomes, companies need to sequence use cases in a self-reinforcing way. They should have a clear understanding of how all the use cases fit together in a digital ecosystem. Overhauling foundational data systems can also have a significant impact. Data products can connect to existing legacy systems, and as digital products deliver value, companies can use the generated cash to modernize systems and implement MLOps tools.
Applying Digital Technology for Rapid Development and Scaling
To execute a business-focused digital transformation, business and IT must collaborate closely. Businesspeople bring a deep understanding of processes and value, while technical experts provide data expertise. Rapid development and scaling are crucial to keep the momentum going. Digital teams should aim to deliver an MVP with tangible proof of impact within three to five months and reach an industrialized and scaled solution in eight to ten months.
Companies need to clarify how to reach the desired end state. For many, fixing the supply chain domain may be the first step towards becoming more customer-centered. By rethinking their mindset, capabilities, and operating model, companies can extract the full value from digital transformations without a large upfront investment. They can reinvest cash generated by early digital products into further innovation, leading to sustained competitive advantage.